The Impact of Global Budgeting on the Efficiency of Healthcare under a Single-Payer System in Taiwan

Since 1995, a national health insurance (NHI) program has been in operation in Taiwan, which provides uniform comprehensive coverage. Forced by severe financial deficit, global budgeting reimbursement was adopted in the healthcare sector to control healthcare expenditures in 2002. A two-stage data envelopment analysis (DEA) approach was used to measure the efficiency of hospital resource allocation among stakeholders in Taiwan's NHI system, and to further explore the changes in resource allocation after the introduction of a global budgeting payment scheme. The dataset was collected from the annual statistical reports of Taiwan's Ministry of Health and Welfare (MOHW) and was used to estimate the efficiency of resource allocation in hospital-based healthcare services under global budgeting. In terms of efficiency during the period from 2003 to 2009, one-third of decision-making units (DMUs) improved their productivity in stage I, and seven out of the total of eighteen DMUs saw falls in financial efficiency in stage II. After global budgeting was implemented, there were significant positive impacts on the efficiency of hospital resource allocation in Taiwan. The two-stage DEA model for analyzing the effects of the global budgeting reimbursement system on productivity and financial efficiency represents a key decision-making tool for hospital administrators and policymakers.